Abstract
The objective of this paper is to understand issues constraining SMEs to apply for bank loans. The study differs from previous findings because it sheds light on factors impeding SMEs to apply for bank loans; compared to previous studies that emphasise on the challenges SMEs encounter to access bank loans. To achieve the objective of the study, we used a qualitative research approach characterized by semi-structure interviews with 25 owners of SMEs. Owing to the objective of the study, the sample consists of exclusively SMEs that did not apply for bank loans. The respondents were asked question about their decisions not to seek for bank loans. The interviews were recorded, transcribed and analysed using content analysis. The result of the study revealed that mostly high rate of interest applied on loans, unawareness about lending procedure and conditions, poor business plan, the delay orchestrated by banks in granting loans to SMEs, and collateral requirements hinder SMEs to apply for bank loans. Therefore, to instigate SMEs applying for bank loans, commercial banks should revise their lending conditions and practices in dealing with SMEs.